RI oil output set to decline: BP Migas

The Jakarta Post, Jakarta

The country's oil output will fall to one million barrels of oil per day (bpd) in 2005 from the current 1.2 million bpd unless new reserves are found, a top official has announced.

The deputy head of the Upstream Oil and Gas Implementing Body (BP Migas), Zainal Achmad, said that the government had to improve the investment climate in the oil sector to attract fresh investments in developing new oil fields.

"A drop in the oil output will undoubtedly have an impact on the state budget," Zainal told Antara over the weekend.

Revenue from the oil and gas sector has been a major contributor to the country's state budget. Last year, for example, 29 percent of the government's income, which totaled Rp 300 trillion (US$33.17 billion), came from this sector.

There are worrying signs that investors are putting a brake on fresh investments in the oil and gas sector.

Last year, out of the 14 new oil and gas blocks offered to investors, only one block was taken.

This year the government is offering another 11 oil and gas blocks, located in East Java, Central Java, Bali and Kalimantan.

Many analysts have said that a number of problems have discouraged investors from investing in the oil and gas sector. These include a worsening security condition in some parts of the country, poor implementation of the regional autonomy law and log bureaucratic delays in dealing with government offices.